Mortgage approvals on house purchases for August sit at 64,858 up (3.8%) from 62,496 in July, according to the Bank of England Money and Credit statistics.
Following revised figures from the Bank of England, this marks three consecutive months of positive growth in mortgage approval levels with the monthly figure having increased since May.
Approvals remain considerably higher (43.4%) than the 45,219 seen in August 2023. There is also optimism for further mortgage approval increases in the coming months, especially if a bank rate cut materialises in November. Anthony Coding, RBC Capital Markets, said:
“New mortgage approvals in August came in at 64,858 up 3.8% on July posting their highest level since September 2022, the impact of the so called ‘mini-budget’ was far from ‘mini’ and homebuyers and housing market investors will be hoping that Labour’s first budget in October will not upset the current housing market recovery. We expect mortgage rates to fall further in the coming months and with wages continuing to rise the outlook for the UK housing market remains on the up and with housing so high on the political agenda it would be a shock if the budget stopped the recovery in its tracks.”
John Phillips, CEO of Spicerhaart and Just Mortgages, said that a net increase of £2.9 billion in mortgage borrowing and a rise in approvals to 64,900 – the highest since August 2022 – reflects “strong demand, despite wider economic challenges”. He continued:
“The increase in remortgaging approvals suggests that more consumers are taking advantage of these improved rates, locking in better deals. As brokers, we are well-positioned to guide borrowers through this landscape, ensuring they make informed decisions at a crucial time. While consumer credit borrowing has seen a slight uptick, it’s evident that households are consolidating their finances, preparing to manage the current economic pressures.
Looking ahead, the combination of falling swap rates and rising mortgage approvals signals a more positive outlook for the mortgage market. Additionally, the increase in borrowing by private non-financial corporations (PNFCs) suggests growing business confidence, which could help stimulate broader economic growth as we move towards the end of the year.”
Nathan Emerson, CEO of Propertymark, commented:
“The housing market has seen remarkable progress throughout the year and the economy stands in a far stronger position as we head towards 2025. All eyes will be on the Bank of England for their next interest rates decision, but also on the UK Government regarding the forthcoming budget and what this might mean for buyers and sellers. The housing market remains sensitive to an ever-expanding population, so it remains essential we see government house building targets jump-started into action as soon as possible.”
What’s more, recent statistics from Nationwide’s House Price Index has revealed that house prices climbed by 0.7% in September versus the previous month. On an annual basis they increased by 3.2%, with this annual rate of growth accelerating from 1.1% the previous month.
This marked the fastest rate of house price growth in two years, with house prices now just 2% off the record highs seen in summer 2022. Coding said:
“UK house prices surged in September as the Nationwide House Price Index posted the fastest annual rate of house price inflation for two years at 3.2% or £8,300. Lower borrowing costs coupled with rising wages has helped improve housing affordability which in turn has underpinned and supported house price growth, homebuyers, homeowners, housebuilders and estate agents will all benefit from improving affordability and rising house prices. Aside from any curved balls in the October budget the UK housing market looks set to finish the year in fine fettle.”
Emerson said that it has been “extremely positive” to see a firm trend of growth emerge across the year within the housing market. He added:
“We have seen the economy settle down to a position that provides far greater consumer confidence and although we are still at the very start of the journey regarding base rates, we are starting to see lenders introduce improved competitive offerings when it comes to mortgage deals, which is a firm foundation for confidence and growth over the coming months.”
